Question: Can you tell us more about Alpha JWC Ventures and its goals?

Answer: We are Indonesia’s top-tier VC firm. Our mission is to find and empower entrepreneurs who are able to become the next industry champions while also looking for companies that can be the next big thing. Our vision is to have a position in the global internet ecosystem and create a world-class capital firm from Indonesia.      

We are a sector-agnostic VC. I think it is too early for Indonesian VCs to be sector specialist because there are still many start-ups that can grow in various sectors and industries. There is yet to be a winner among consumer tech start-ups, but I think we will become a sector specialist VC in around three to four years after we see some more successful start-ups.

Why did you want to become an investor and what is your investment philosophy?

Around 2009, I saw that the internet economy in the United States and China was developing rapidly, but in Indonesia, there was almost no internet-based company. However, Indonesia is a big country with good internet penetration, so I saw a great opportunity in its tech companies’ development.

By the end of 2009, I cofounded East Ventures with other partners. We invested in Tokopedia and Traveloka in 2010 and 2012, respectively. We were the only VC in Indonesia at the time. Then, in 2015, I cofounded Alpha JWC, as the country’s internet industry has become more mature.

We invest in early-stage companies, so we look for 4Ps in a company instead of their numbers. The 4Ps are people, product, problem and potential. For example, [we look at] the problems they are trying to solve and whether they could become a sustainable company.

After we invest, we apply different matrices for different sectors. We look at whether an e-commerce firm can stop burning money, how much margin they take and how they can become profitable, for example.

According to Google’s e-Conomy SEA 2020 report, start-ups are focusing more on being profitable amid the pandemic. How important is a start-up’s profitability to your firm?

Business fundamentals and unit economics are very important. However, as we invest in early-stage companies, we only look at the start-ups’ fundamentals and profitability projection. Moreover, they must be able to have an estimate. This is because they cannot keep raising funds for years on end, they need to become independent.

Around three to five years ago, people only looked at [a company’s] growth and they did not consider the company’s profitability, but that is changing now.

I think for start-ups, “burning money” to get users in their initial stage is a must, but not for too long. It would not make sense if start-ups were raising funds for 10 or 20 years, as they must be able to turn their negative balance sheet into a positive one.

What is Alpha JWC Ventures plan forward? Which start-up segment are you most interested in funding?

So far, our asset under management is around $200 million and we are planning to raise our third funds of around $200 million. We are going to the market for fundraising soon.

We do have some sectors that we like right now, such as consumer tech, fintech, educational technology (EdTech) and food and beverage (F&B). In fact, one of our missions is to bring local F&B to the international stage. Why can’t we drink Kopi Kenangan in the US or Singapore? I think that could happen very soon.

I believe in the next three to five years, at least four of our portfolio companies can become the next unicorn from the consumer tech sector. We have been focusing on funding consumer tech in the past couple of years, and we think consumer tech will still be the big thing forward.

What is your outlook on Indonesian start-ups in the future?

In the next decade, there are definitely some fintech companies that can also become start-up unicorns. Fintech and consumer tech have the right proportions to birth more unicorns in the future, that is my view.

I also think that we will see more quality start-ups forming with better projects and teams. Start-ups that cannot compete will be out of the picture and the good ones can survive and grow.

Indonesia’s start-ups opportunity is tremendous, especially since the US-China tension has pushed investors to redirect their funds to Southeast Asia, and they are focusing on Indonesia as a big market.

I believe the global investors that come to Indonesia will help stimulate tech companies in the country and accelerate the growth of quality entrepreneurs.

Lastly, you have been a venture capitalist since 2009. What have been the persisting challenges in the VC and start-up scene?

The challenge since the very beginning is talent shortage. Over time, there has definitely been an improvement, as all stakeholders, including the government, are involved in developing the talent sector. We must keep on trying to enhance our engineers and programmers’ skills to possess world-class quality talents. This can be achieved through transfer of knowledge programs, for example.

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